With changing landscapes and blurring borders between countries, the landscape of Leadership is forever changing. A good Leader is one who is able to become better by the minute in sync with the environment that he is operating in. Read the views of some seasoned Executives on leadership in this section.
When I checked with a HR Head of a Company recently about how they are handling COVID19, his response was that probably there is some amount of overreaction and Social media hype about it. But looking at the rapid spread of the Infections, maybe he changed his mind by now. COVID19 is declared as a Pandemic by WHO and India declared it as ‘Notified Disaster’. I think we need to take it seriously to ensure we stay in control.
Why a response is needed from Corporates?
COVID-19 is currently coming from People who travelled abroad. Corporates contribute to a good proportion of the Foreign travel. Foreign travel either for Business or for pleasure by the Employees of the Corporates. If we include the Children of the Corporate Executives studying abroad, the Corporates contribute to a lot of Foreign travel. Hence, Corporates can play a very important role in controlling the spread.
Indian Companies are perennially in Crisis!
If you look at the Eisenhower Time Matrix, most of the Indian Corporates are perennially spending a lot of time in the Q1. ‘Urgent and Important’. There are too many Crisis and we keep handling the issues right at the brink. Not a good thing. But we keep doing it. Indian Corporates are experts in living at the edge of the Chaos. We don’t quite get into full time Chaos. But we keep going in and out of them just like experts!
My experience with the Indian Corporates is that when a Project is taken up, we ask for a lot of time. We fight for more time for the Project with the Boss. You would think the team would really do a great job by working on it systematically over the period of time taken. But most often I start getting calls from the team two days before the Deadline agreed. They would be asking for clarifications about the Project. They work very hard over those last few days and Complete the Project. It would never be a Perfect job. But it won’t be a bad job either. I am not saying 100% of Companies and 100% of the Executives work this way. Maybe you do it much better in your Company?
Because of this dubious ‘capability’ to work well in a Crisis, I expect the Indian Corporates to do a very good job.
But what is Critical is that they should identify it as a focus area and attend to it. A Clear Leadership is required for this Pandemic / Notified Disaster. Otherwise everyone will be busy with their existing Crisis situations and wait for COVID-19 to become ‘Urgent and Important’ !!
What are the areas for focus in this Disaster?
There can be at least 4 areas that a Corporate should address.
a) Your Employees: First focus area has to be your Employees. If you take care of your Employees, you are maintaining a big group of Healthy Citizens who can do more in this situation. Even if you do not do anything for the Society directly, maintaining your Business and contributing to the National GDP in this situation is a good enough contribution. Many companies are slipping on their growth right now.
b) Your Vendors: Second focus has to be on your Vendor Partners. If you are a Big company having several small vendors, then you can contribute a lot by helping these vendor partners to face the Challenge. It would also help you to keep the Production going without supply disruptions.
c) Your Customers: Then comes your Customers. If you are able to keep your Employee flock together and healthy, have uninterrupted supplies you can take care of your Customers. You would contribute to Economic growth in this challenging time.
d) Your City / Society: Then the City in which you are operating. If each corporate can contribute to taking care of part of the city that you are operating in, it can be a great help to the Government.
There can be more angles to a Corporate’s Circle of influence. But let us start with these.
What can you do?
01. Recognize the Problem: First of all, we need to recognize this as a Serious Problem. We cannot be lost in our ‘Urgent New Product Projects’, ‘Customer Line stoppage issues’ and so on. Please look at handling the COVID-19 as in the same direction as attending to all the Business Emergencies that you have. You are only modifying your approach and attending to an underlying issue for every project in your Company. Special effort is required for Corporates to recognize it as Problem as we are used to responding in the last minute. This is one problem that you would not like to respond in the last minute.
Data says that just a month back there were just 4 cases of the Infection in Italy on 21st Feb’19. On 13th March, there were 15,000 with 1400 deaths! Containment is the critical action that you can take. There is right now no medicine for this Virus.
02. Learn about the Problem: It would help to learn about the Problem from Experts. You may not be generally in touch with these Experts. You may have to contact someone in WHO or AIIMS or any of the Private Corporate Hospitals where the knowledge may reside. Invite an Expert to your Company and let your teams understand the Problem and the precautions that we need to take.
03. Formulate Teams: Formulate teams to address the four groups of Stake holders that you want to address. Depending on the resources that you have, you can prioritize in the Stake holders. Have clear leaders for the teams and Objectives that they have to focus on.
04. What can be the Goals: Single biggest Goal is for everyone to stay healthy. But the Process goals have to be the New Behaviors that you want the Stake holders to Practice. Some of the new Behaviors can be as follows:
a. Spreading the knowledge about the Problem and the seriousness.
b. Not shaking hands. Practice Namaste instead.
c. Working in Shifts to reduce the density of the employees.
d. Using Video conference even for local meetings.
e. Maintaining some distance between you and your colleagues.
f. Avoiding non-essential travel.
There can be many more practices that you may define in your Company. This article is not meant to define a complete list of Best Practices anyway.
05. Create Champions for monitoring: Some of our Colleagues are naturally more disciplined and keen observers. Eg. Audit department colleagues, Quality Department colleagues and so on. Use their services to monitor the practices that you have defined. As these are new practices / behaviors that we are trying out, there are bound to be violations. These Champions have to identify the violations and keep talking to the Teams.
06. Quick Decisions: In a Crisis, there have to be quick decisions. There can be a small team of Senior people who can be authorized to take decisions as needed. The Teams have to be informed about this.
07. Communicate, Communicate and Communicate: Communication is another important aspect that is very critical in this situation. It would be quite okay to over communicate. Let the Problems and solutions be known to everyone in the Company. Maintain transparency. Especially in the light of Bad news. Whatever is construed as Bad news can be screened before relaying. This is to ensure spread of undue panic.
Through your efforts if you can keep your Employees healthy and also create Soldiers who can contribute to the immediate society around you, then you have done a great job!
You would have also trained your Team to handle a real Crisis before it really hits you hard!!
How are you responding to COVID-19? Please share so that Others can learn from you!
Act fast and Prevent the spreading of COVID-19!
India Inc has been waiting for the ‘Ache din’ and some companies seem to have given control of the ‘Ache din’ only to the government and looking at the government to deliver the growth for them!!
Yes. Definitely government can do some significant things in areas of policy and investment. But, there is a lot that individual companies can do for their own growth. Are all companies doing this? I have my doubts. I can see evidence of companies getting lost in the argument of ‘low economic growth and hence low growth of their companies’. Worse still, some companies are going down compared to earlier years!!
In the past few years, the economy of India had not been growing at a healthy pace.But, it’s been growing!! There is way too much importance given by most of the companies to the overall sentiment.
To understand clearly about the overall scenario that we are talking about, let us look at some numbers.
Indian Economy was $ 1,996 Billion in 2014.
Size of top 30 countries in the world is about $ 63,000 Billion in 2014.
The Indian Economy is still growing at about 5-6%.
The world economy is growing at about 4 %.
Now, what are the numbers that the individual companies are chasing? A mid-sized company with a turnover of say Rs 300 Crores needs about Rs 30 crores to maintain decent growth. Even a company of the size of Rs 1000 crores needs another Rs 100 crores for a decent growth. Why are these companies worried so much about the Indian Economy growth, slowdown in Europe and so on? Is it that they can grow only when the Indian Economy grows at about 8%?
I think that these excuses should not be accepted by the CEOs of Companies. They should chase growth in a single minded manner. The growth is possible for every company in their own chosen areas. They need to look at specific areas that need attention rather than get lost in the world / Indian Economy numbers!
While looking at companies who are growing and those who are not, I learnt that there are a few essentials for a company to adapt a ‘growth mind-set’ as opposed to a ‘status-quo’ mind-set. Let me discuss each one of them.
I don’t say there is no other issue other than those discussed below. But, certainly I think these are Seven important factors for every company.
For a company to go to market and seek to sell more than what it did in the past, it should have its’ back end in a good shape. I know companies who are having problems in their back end and are not resolving them decisively. The essentials for a good manufacturing set up are: a. It should be efficient enough to deliver the product to the customer faster than the competition. b. The manufacturing back end should be able to deliver what the customer wants and not what it can produce. The flexibility on the shop floor is a very important aspect. c. The Manufacturing cost should be lower than that of competition. d. The Quality has to be world class and continually improving. e. It should be able to with stand the scrutiny of the best customers across the world.
Adapting the Lean Principles is absolutely essential to achieve the above.
The companies who have done well in the last two years have done so with the help of new products. Whether it is Ford, Maruti or lesser known companies that I know of have all added new products and new customers in a continuous manner.
Every company need to enter new markets and introduce new products actively. Many of the Indian Companies have not mastered the art of entry in to new markets. Whether these new markets are within India or outside India does not make much difference. The markets outside have more complexity involved. But, even the markets within India are highly diverse. How you approach the South Indian Customers can be quite different from how you do it with North Indian Customers! Not every company has mastered the art of managing these diverse markets.
The New Product development has to be quite fast. The Products may have to be adapted to the needs of new customers or totally new products may have to be developed. Still, the Indian Companies are in the mode of ‘one size fits all’ mind-set. We have to get over this mind-set and give what Customers need.
The competition is rising in every field as we speak. More and more companies are coming in to play. International companies entering India has increased significantly. All these companies are bringing money and technology in to India. With this, the local companies will face the risk of being reduced to producing low technology products. The Indian Companies need to continually improve the technology of their products and processes. They need to move up the value chain and offer better products. I can see some good examples of Indian companies giving a tough competition to the foreign companies with new and better technology. But, it still requires a lot of focus and improvement. The development of people in the area of technology still needs a great focus. The spend of Indian Companies on developing people in the area of Technology has to improve significantly.
The Indian Companies need to be highly responsive to the needs to Customers and other stake holders!
The Customer is still not a good word in all Indian Companies. There had been a very good improvement. But, still the companies are looking at what is needed today and not willing to invest for what is needed tomorrow and the day after! We are still looking for short cuts in meeting Customer needs. The practice of ‘somehow’ meeting the customer needs is still continuing. This is resulting in a unsteady/unpredictable performance by the companies in satisfying the customers.
The Companies also need to be highly responsive to Employees. Indian Companies have seen the turnover of their senior people and staff going up in the past 5-8 years. But, still many companies are approaching this problem by recruiting continuously. Not many companies have addressed the root cause and made definitive changes in their way of working and the way they treat their employees.
This perhaps is the single biggest success factor for any company! The Company and the Senior management should be able to learn as they breath!! The market situation and the business situation in general is changing very fast. The expectations of the employees are changing, expectations of customers are changing, the technology is changing. Indian society in general is undergoing a big change. There are changes in the way we eat out, the way we shop out , the way we shop on line, the way like to work. Entrepreneurship is blossoming. India is becoming a darling of Start- ups! Something we could not have imagined a few years back! If the company cannot recognize these differences or leverage the new practices, then that company will loose out. If the top management is not able to learn from their environment and make subtle changes in the way in which the company is approaching the customer, it cannot sustain. More and more efficiency is needed in the way each function works in a company. If a Leader continues to push the company he had been pushing , then that company is bound to suffer!
We need to keep re-assessing our methods and changing to be in the game !
This seems counter intuitive. Especially in the times when the ‘Economy is not doing well’ ! But, this is absolutely needed to continuously growing. Indian Companies have a serious problem in this area too. We are comfortable in cutting costs than growing! I know many Senior Executives who continuously project the savings that they are doing in travel, people, communication etc when actually they should be investing more in this in a situation where you have to work more to get the same or more. I can see companies digging themselves deeper in to the hole with this approach.
But, what is needed is a Leadership which can take calculated risk and then over invest in to areas that will contribute to the growth of the company.
Managers feel safer to say that they are cutting costs rather than saying ‘I am over investing in to this area and I will deliver the result’. The CEOs have to recognize this reality. They have to encourage the Managers to take risk selectively and then get better results.
A tardy Economic situation may cause some problems to companies initially. But, after sometime the Company itself will be causing more harm to themselves by cutting costs everywhere!
A company that is hoping to grow at a healthy pace in any situation should have strong process within their company. This process may be based on TQM principles / 6 sigma / Balanced score card or any other principles that make sense to the company. But, it should keep modifying and strengthening the process continuously.
Companies should avoid the lure of ERPs when they do not have proper process in manual mode. They should improve the discipline of the people and put manual systems before they jump on to software!
If Indian Companies can adapt these seven essentials, there is no reason why they cannot grow in a continuous manner. It will take some time to adapt these practices and improve in to an efficient organization. But, some Indian Companies are learning this and showing that this is possible. At “The Indian manufacturing Academy” (TIMA) we have been lucky to be part of some of those success stories. We wish more companies will find their own ways and find their mojo!
Developing Others into Leaders
While the first two aspects of Leadership we considered so far had a lot to do with winning, results, strategy, etc., the last two aspects of leadership have to do with development. Firstly – developing others into leaders and, growing themselves into better leaders. In this piece, we will discuss how great leaders develop others into leaders. Below is the re-cap of the framework for the leadership mind-set.
If you Google words, “Developing Leadership”, or “Developing leadership in others”, you get anywhere between 70 to 145 million hits! In my experience, as many leaders are there, so many approaches to developing leadership. There are leaders who swear by “Level 5 leadership”, “Transformational Leadership”, “Inspirational leadership”, “Servant leadership”, “Charismatic leadership”, “Situational Leadership” and others who strive to develop “Leadership bench-strength”, “Leadership pipeline”, or “Leadership Engine” in their organizations.
Some leaders try to avoid all these and aim to develop “leadership qualities” that can range from “Emotional Intelligence”, “Principle-based”, “Entrepreneurial”, “Trustworthiness”, “Fairness”, “Strategic orientation”, “Change champion”, etc. in their people.
Some leaders take up a process/ tool-kit orientation and try to develop leadership in their organizations through “Role modeling”, “360-degree feedback”, “Corporate Universities”, “Assignment Planning”, “Talent Development”, “Leadership coaching and mentoring” and so forth.
Some leaders also believe in developing the right leadership style in their followers that could range from, “Participative leaders” to “Laissez-faire leaders”, “Task-oriented leaders” or “Relationship oriented leaders”. Some also use and follow many different leadership theories like, “Behavioral” or “Functional” or “Situational” or “Psychological” theories.
And no wonder, it is all confusing and it is very difficult to get started, especially if it is not a global company with vast resources that you are working for. A summary of some common themes across these multiple approaches may result in a somewhat simpler guide to get going on developing leaders in your respective organizations.
Developing Leaders or Developing Leadership?
The first distinction we need to develop is to understand the difference between “Developing Leaders” and “Developing Leadership”. Developing Leaders is about all the activities in the organization that focus on growing high potential individuals into leaders that will play key roles in leading the business/ organization. In this, Developing Leaders has a lot to do with Talent Development or Career Planning of high potentials. On the other hand, “Developing Leadership” often refers to growing leadership abilities broadly across all the employees in the organization. The particular set of leadership abilities will depend upon what each organization chooses as necessary in their business. Some common abilities include “Takes Initiative”, “Able to perform without supervision”, “Acts decisively”, “Collaborates”, “Communicates”, “Analytical ability”, “Does the right thing in the right way”, etc. Training and Development or Management Development is often the processes/ tools used to accomplish this.
Qualities of effective “Developing Leaders” cultures/ approaches
Personal Responsibility: Most effective approaches involve leaders taking personal responsibility for identifying and developing top talent into future leaders. Top leadership at General Electric spends a significant amount of time reviewing top talent and planning their assignments as part of business meetings. C-session reviews at GE are equally famous. The personal responsibility manifests in a few important forms – a) visible role modeling; b) investment in establishing the process for identifying and developing leaders; c) constantly reviewing and discussing future leaders and their careers with important stakeholders, particularly the board of directors; d) advancing leaders who develop other leaders; and e) investment of personal time and effort in evangelizing the importance of developing leaders for the future.
Personal Responsibility at all levels: “A community is like a ship; everyone ought to be prepared to take the helm – Henrik Ibsen” One of the most significant qualities of effective leader development cultures is that leaders at all levels take the responsibility to develop others into future leaders in their respective spheres of influence. This is not limited to top management only. When this becomes part of culture, a self-sustaining process of leader development is established. In Procter & Gamble, historically advancement of executives was based on, besides other factors, the number and quality of leaders that the executive had developed and the type of key positions they now occupy.
Personal Relationships: When leaders take personal responsibility, they also invest in developing a personal relationship with the future leaders. Many executive leaders have regular “1:1’s” with the future leaders and have personal time with them when visiting businesses outside the HQ. These 1:1’s are not business review meetings – they are on top of them. They are not “issue resolution” meetings – they are for the purpose of growing the personal relationship in the backdrop of business. These meetings could be simple 1 hour conversations once every month, supplemented by more time when face to face. This is the closest to a “collegial” relationship that can happen inside the organization structure – a type of relationship that is critical to learning and growth. This relationship not only contributes to the future leader learning from the experiences of the executive leader but also results in establishing a relationship based on mutual trust. Decision making in a mutually trusting relationship is not only fast, but also ensures alignment on strategic issues.
Experience as the basis for development: The single biggest differentiator between great leader development cultures and others lies in the degree of reliance on formative experiences for the growth of future leaders. Some companies like GE, P&G and others have a formal process for planning the assignments of their high potentials so that they acquire over time, with increasing responsibility, the experiences – business, functional and geographic that will make them suitable for higher level roles. For example, working with largest customers, most difficult but promising geographical markets, businesses in turn-around situations, working with joint venture partners, managing in volatile markets, etc., all form the character and muscles of future leaders. Morgan McCall in his book, “High Flyers” details the core elements of powerful experiences that lead to the growth of leaders.
Strong link to Business Strategy: It is commonly accepted that businesses must place their strongest leaders on the most strategic battle fronts. What is less obvious is the dual realization that such strategic battle fronts offer the best learning experiences for future leaders and that leader development can be linked closely with business strategy to make the best use of leadership capability a business possesses. The best of the companies translate their business strategy into leadership challenges and select the leaders who can benefit most by facing such challenges successfully. For example, if international expansion is a major strategic front for a business, it is also a great opportunity for that business to develop its future leaders in this area. This opportunity serves in two ways – offers the best learning grounds and also develops the leaders of future with the right experiences.
A Learning Environment: “Leadership and learning are indispensable to each other – John Kennedy”. One of the top characteristics of leaders is that they actively seek opportunities to learn. If the organization doesn’t encourage learning, especially from failures, it is difficult to see leaders growing in such a culture. Most people learn most from their peers – not from figures of authority. In this respect, a culture where peers can, without competitive pressures, share experiences and learn from each other is one of the most fertile grounds for growing future leaders. Peter Senge, in his book “The Fifth Discipline” says, “In a learning organization, leaders are designers, stewards, and teachers. They are responsible for building organizations where people continually expand their capabilities to understand complexity, clarify vision, and improve shared mental models – that is, they are responsible for learning.”
Protection from de-railment: Many leaders, particularly when they seem to be doing well, delivering more than their promise, seem to go off the rails and fail, often resulting in end of their careers. Best of the organizations protect their best talent from this type of derailment via a couple of approaches. One is to provide Coaching and Mentoring help – often from other leaders in the organization who either have many more years of experience or are in higher levels. The other approach is to provide promising leaders with executive coaches from outside the organization who have long and impressive track records as business leaders. The help lies in ensuring that the leader doesn’t ignore weaknesses and doesn’t over-play strengths to the extent that they become weaknesses. Achieving a balance between using strengths and overcoming weaknesses is often the only feedback (besides performance feedback) that a leader on the way to realizing her/ his potential needs.
Often, the task of Developing Leadership in employees is the responsibility of a “Corporate University” or “Training and Development department”. Many of these organizations make a distinction between two different sets of abilities – “Technical Mastery” and “Leadership/ Management Skills”. The former abilities refer to skills and knowledge that are essential to high quality, on-the-job performance. For example, for a young professional in the corporate finance department, such skills would include Financial Analysis, Forecasting, knowledge of analytical models such as NPV, Total Shareholder Return, etc. A high degree of mastery of these “Technical Skills” is seen as a pre-requisite to gaining leadership abilities as these skills help achieve a track record of results that gives the basic credibility an aspiring leader requires.
Concurrently, “Leadership or Management development” focuses on helping employees acquire skills such as “Collaboration”, “Communication”, “Interpersonal skills” “Emotional Intelligence”, “Situational management”, etc. An effort to develop a combination of the technical skills and the leadership/ management abilities, when done broadly across all employees in an organization, over the long term, leads to “Leadership development”. The method of this development is mostly class-room training, supplemented by field/ project work and various other methods of learning such as action learning.
Human Resources department or in some cases, a special Corporate University often lead this effort. In the best organizations that truly have a leadership development culture, a majority of teaching and training is personally led by various levels of leaders of the company (versus using consultants or business school professors). This is due to the fact thatthere is a clear expectation that developing others into leaders is personal responsibility of leaders and plays into theirreward and progression in their organization.
In the next and last article, we will examine how the best of leaders grow themselves into better leaders in a constant search for betterment.
Becoming Better Leaders – Creating Conditions for Winning
In the last article, we discussed how leaders compete to win as well as their motivations and drivers. An entrepreneur evolves into a leader by developing the ability to build an organization that has the right people with right attitudes to achieve on-going success vis-à-vis the vision and the goals. The way we talk about success is that it is on-going – not a short term success but building an institution that continues to be successful in accomplishing and furthering the original vision for which it was formed.
When they act, in my opinion, leaders think about this ability in its broadest sense – how to create the “Machine” that keeps winning. Narrower definitions would be “Organization building”, or “Winning Culture”, and so on that represent essential elements of the overall thinking framework but not its entirety.
Peter Drucker says in his book – Management : Tasks, Responsibilities, Practices, “A manager has the task of creating a true whole that is larger than the sum of its parts. One analogy is the task of the conductor or a symphony orchestra, through whose effort, vision and leadership individual instrumental parts become the living whole of a musical performance.”
Jim Collins, in his book Good to Great says of Level 5 leader: “Demonstrates an unwavering resolve to do whatever must be done to produce the best long term results, no matter how difficult; Sets the standard of building an enduring great company; will settle for nothing less”.
Choose and Commit: This is the very first element of a leader’s framework for creating conditions for winning. In a nutshell, this is all about choosing a path and committing resources to start the journey of winning. This is a conscious decision making process whereby a leader defines his/ her stage/ arena that excludes pursuit of other opportunities and other “plays”. Choice and Commitment has the following 3 areas of action:
1. Defining a mission
2. Formulating strategies
3. Investing in capabilities for competitive advantage
Defining a Mission: The purpose or mission of a business serves two functions – it unites the employees and focuses their energies; and it serves as a beacon to attract the right type of talent. Mission also provides the primary source of motivation to employees; this is the cause for which they would strive. This is a major act of choice on part of the leader. Here is a simple yet easy to follow suggestion from Peter Drucker on this:
“Talk to one customer every day this week. Ask them how they see your company, what they think of it, what kind of company they believe it is and what they want from it. Use this feedback to better define your company’s mission”.
Whether it is a mission statement or a slogan or a vision – whatever this called, a leader thinks of mission as a motivating and clearly guiding set of words for his/ her followers. A leader also knows that for a mission to be a living, guiding set of words, it has to link clearly to investment of resources, selection of people and evaluation of results for success or failure. For instance, Bristol-Meyers Squibb’s mission is, “To discover, develop and deliver innovative medicines that help patients prevail over serious diseases”.The implications for major activity focus and investment are clear – i.e. R&D; hiring of outstanding scientists; research into serious and life threatening diseases; delivery of medicines to patients, etc. A clear mission statement conveys choices that have been made and areas of endeavor that have been excluded – as a result, acts as a clear guide for what to do and what not to do – in this case, everything outside of medicines for serious diseases. W. Edwards Deming, the quality pioneer once said, “It is not enough to do your best; you must know what to do, and then do your best”. Over time, it is clear that this type of clarity of mission also attracts the right talent to the organization who can see what skills and talents are valued and how they fit.
Formulating Strategies: Once a leader defines his/ her mission, comes the next step of deciding “Where to Play” and “How to Win”. This is the act of formulating strategies – the market place segments or product or service categories (the playing fields) where the leader sees the most opportunity to win and lead; and investment decisions (in capabilities) as to how to win against competition in those playing fields.
Examples of “Where to Play” –
- High-income segment of customers in metropolitan areas will be our prime targets.
- Compete in the value segment of the regional market for cooking oils; introduce innovative higher end products, riding on leadership in basic products.
- Leading supplier to the top 10 retailers in the country
The aim of “How to Win” is to define the type of competitive advantages that the business needs to develop in order to win in those market segments or product/ service categories. Examples of “How to Win”:
- Innovation stream for supplying products and services to high-income customers
- Fast, flexible, reliable delivery network that can deliver custom service package that high end customers demand
- Cost leadership in order to compete for leadership in value segment
- Excellent supply chain to satisfy the product delivery demands of top 10 retailers
Leaders typically think in terms of “What” (product, service, customer, etc) first and then “How” (competitive advantages, capabilities) to win.
Investing in capabilities: In the minds of leaders, acquiring the capabilities needed to execute the chosen strategies is an integral and nearly parallel process to that of strategy formulation itself. This is because choice of a strategy also is dependent upon the cost, speed and feasibility of acquiring the needed capabilities – since resources are limited, all strategies are not equal. Capabilities are typically of two types – what people/ talent bring; and that which needs to be built as organizational process or system. While they are inter-related, it is important to recognize the difference and invest appropriately. For example, superior data crunching capability is a function of the right equipment/ process and the right talent to run them and produce results. Certain capabilities transcend these two factors - for example, strong, durable customer relationships that a company has is a capability that has been built by many people, over time and is a part of the institution itself. Successful leaders seek to identify and leverage such institutional strengths as competitively advantageous capabilities.
Most successful leaders, throughout history have focused on finding, recruiting and growing the best talent they could. Here is the inscription on the tombstone of Andrew Carnegie –
“Here lies a man
Who knew how to enlist
In his service
Better men than himself”
Lot has been written on the subject of talent management. Successful leaders seek to ensure that they have the best possible talent for their business; that their capabilities are used for the best purposes/ projects in the business; and that their knowledge and skills are grown continuously to prepare them for bigger challenges. As Admiral Chester Nimitz (US Navy Commander of Pacific in WWII) once said, “Leadership consists of picking good men and helping them do their best”.
Often, leaders who are not entirely clear in their thinking invest irrationally in capabilities that they don’t often are not ready for – e.g. capital expense for “optimistic” manufacturing capacities; latest IT equipment and software; “professional” marketing and sales managers; etc.
Since most business leaders have a fairly clear understanding of their core capabilities (e.g. innovation, low-cost manufacturing process, low cost finance, etc.) when they start out, we can only assume that these excessive investments are a failure to manage the balance between short and long term. Investing way ahead of the right time and in technologies, processes and talent that are today’s fads in market place are the primary reasons for going off-target. Once a high cost, high quality but more than necessary IT technology has been put in place, it is difficult to avoid the distractions such capabilities pose. Case in point is the experience of so many businesses that invested too early in expensive ERP systems before they were ready. The investment right-off’s and related downsizings are both a source of distraction and demotivation for employees.
Focus on Execution: With direction and capability in hand, a clear action plan, well thought-out, “socialized” amongst the key players in execution, discussed, reviewed, and revised often before the start of execution seems to be the hallmark of the way successful leaders mobilize for execution. This process of thinking, talking and revising often takes time.
As Abraham Lincoln once said, “Give me six hours to chop down a tree, I will spend the first four sharpening the axe”.
An interesting aspect of this “socialization” is the discussion that occurs as to how this plan contributes to the overall mission or purpose of the business – as a result, more alignment amongst key players is achieved than otherwise. Many leaders avoid this aspect of action planning, choosing to “Tell” or “Deploy” their action plans to their followers, thereby robbing themselves of a majority of the energy and goodwill of their managers to work toward the mission or purpose. Many other leaders who take pride in being action oriented often follow, “Ready, Fire, Aim” and not, “Ready, Aim, Fire” which is a recipe for re-work. Successful leaders recognize the cost of rework – when a plan is revised mid-way through execution and a directional shift happens, the cost of delays, demotivation, conflict, etc. take away all the profit from that pursuit, besides making talented and successful people feel like failures.
Though it sounds very common place, committing resources to a plan is one of the fundamental ways to ensure successful execution. As Peter Drucker said, “Unless commitment is made, there are only promises and hopes; no plans”. And, further, “A plan needs to be tested by asking managers, “Which of your best people have you on this work today?” The manager who comes back and says, “But I can’t spare my best people now. They have to finish what they are doing now before I can put them on to work tomorrow,” is simply admitting that he does not have a plan.”
While learning from performance is the hall mark of successful execution, continuously revising action plans will not lead to success – too much change and revision while in executing a plan only leads to confusion.
“We trained hard—but it seemed that every time we were beginning to form up into teams we were reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing, and what a wonderful method it can be for creating the illusion of progress while actually producing confusion, inefficiency, and demoralization.” (Attributed to Roman Satirist, Petronius Arbiter 27 – 66CE, quoted by Robert Townsend in his book “Up the Organization”)
Another necessary element of successful execution is measurement. Unless, 1) anticipated results from the action plan are published and widely understood; 2) a measurement system of measuring progress is put in place; and 3) individuals are free to self-measure their performance against these milestones, everything ends up being a success (or failure). Also, in the lack of a measurement system, people and organizations often measure only success or failure – not progress. This is one of the causes for demotivation and abandonment of plans. As long as people have a sense of progress being made, they will move forward. Progress milestones also make it easy to celebrate quick an short term wins as the time horizon for most business plans is months, if not quarters and sometimes years. It is crucial that all 3 aspects – anticipated results, measurement system and ability of people to self-measure be put in place since only then can there be a consensus in the organization as to if the executed planwas ultimately a success or not. Building strong execution muscle in an organization also involves in creating a culture where there is a consensus on success or failure and less dependence upon a declaration from the top.
So, the hallmarks of Focus on Execution in a leader’s mind tend to be – a) “Socializing” the plan; b) Commitment of necessary resources; c) Learning from performance feedback; and d) a system for measurement of progress.
A Culture of Performance: Successful leaders who have built large, enduring and successful organizations talk about creating “Meritocracies” in their businesses. This is a combination of two factors – performance being the sole or main criterion for recognition and progress; and a “collegial” culture that seeks to convey a message of high performers working together on a high performing team.
Firstly, performance as the sole evaluating criterion has the merit of applying the same criterion that owners/ shareholders use to evaluate a business – thereby ensuring that performance becomes the culture of the business. Secondly, since performance can be measured, most people-related decisions can be made on the basis of data rather than on factors such as antecedents (age, gender, race, the college the person went to, relationship to “Family”, etc.) or personal “qualities” (social skills, emotional intelligence, IQ, etc.). Thirdly, talented and high performing people feel that they have “earned” their reward and recognition through their own efforts to generate appropriate and importantresults. Lastly, since performance culture is data based, a high degree of differentiation can be introduced between different degrees of performance for reward and recognition. Given the right type of people, this differentiation serves as a measure of motivation and not to the contrary as talented people tend to compete with standards of excellence (performance) just as leaders do. In many instances, people who are not competitive in a high performance culture self-select themselves out of that organization.
While the concept of basing people-related decisions on the basis of performance is easy to visualize, it is difficult to implement. Jack Welch of GE who thought about his company’s culture as a meritocracy focused on some of the following aspects (among many other things) to nurture and grow this culture:
· Stretch – an annual budget process that emphasized stretch.
· Aligning Rewards with Measurements
· Differentiation amongst performers
· Appraisals all the time
The second aspect of a culture of performance is “Collegiality”. It is a feeling of camaraderie and informality that one experiences while working with peers who signed up for the same mission. It is a product of working in high performing teams where everyone is of a high caliber, skilled in different areas, competitive yet collaborative in support of the mission. Usually in cultures of high performance, while reward is performance based, recognition, at least the type that is most sought-after comes from peers. In such culture while hierarchy exists to serve as the basis for making decisions of increasing complexity, informality works across the levels to ensure that it is one team that performs at the highest level possible.
Often, reflecting the failure of leadership thinking and effort, culture in many less successful companies and particularly in developing markets lacks this “collegiality” and is either excessively bureaucratic or hierarchical.
Always present: Finally, a leader who focuses on creating winning conditions is always present in action – in the thick of it. Many leaders and many texts tend to call this – “Role modeling”. There has been a lot of controversy about leading from the front and leading from behind in recent years. Peter Drucker recalls a high school assignment where they had to read books on WWI and discuss. One of his fellow students asked, “Every one of these books says that the Great War was a war of total military incompetence. Why was it?” Drucker says that, their teacher’s response was, “Because not enough generals were killed; they stayed behind the lines and let others do the fighting and dying”. Effective leaders are always in the thick of the fight; they thrive being in the center of action; in the middle of all the conversations that are critical for goal achievement; they are always evaluating; appraising; rewarding; celebrating. They work alongside their employees; they work 80 hour weeks just as their top performers do; they have a clear set of tasks and duties that they need to perform at the same high levels of performance they expect from others. In the minds of such leaders, they are such an integral part of their teams, quarterbacking the team that their teams can’t win without them. This in no way detracts them from delegating, coaching, developing others. It is their love of action that makes them present every day, every minute in the business.
Often, degeneration in morale can be directly linked to the “absence” of the, in a figurative sense. In today’s flatter organizations, this “being present” is of more importance than ever as the leader and his/ her performance; their integrity; their values; their lifestyles are visible to ever increasingly larger parts of their organizations. “Spirit of the organization is created from the top”. It is also a truism that trees die from the top.
In the next installment, we will consider how leaders tend to develop others in their organizations into leaders themselves.
In the last article, I shared a framework for the mind-set of leaders that I developed from my observations of leaders over 35 years of my career across the globe. This article, the second in the series, explores the first three aspects of the element,Compete to Win in some detail. Here is a brief re-cap of the framework of leadership from the last article:
Compete to Win.
“… if I had to single out one element in my life that has made a difference to me, it would be a passion to compete.”Sam Walton, founder of Wal-Mart.
Competing is the key to a leader’s mind. Leaders are competitive beings. They love to find arenas where they can compete against themselves or the records of others. In the minds of most leaders, it is a necessary condition to have a standard or a record against which to push to motivate them to action.This is almost like necessity of pushing against the wind to gain lift in order to fly. They have a paramount need to play, compete, take risk, grow themselves, discover themselves – this is their idea of having fun…
“I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not trying.”– Jeff Bezos of Amazon.com
“Does making money excite me? No, but I have to make money for my shareholders. What excites me is achievement, doing something difficult.” – Dhirubhai Ambani, Founder of Reliance Group
Their motivation to achieve seems to come from competing with standards of excellence in order to better them and establish new records.They are obsessed with betterment that comes through competing against established standards and norms. For example,
“Paying the highest wages, while having the lowest wage costs.” - Jack Welch, former CEO, General Electric
It is very important to understand that their competition is with records or standards that are mostly measurable– market share, profits, margins, sales growth, costs, winning a contract and so on. It is not competing against people. Often, the standard that the leader chooses to compete with is carefully defined in a way that makes action possible.
See the motivation for Dhirubhai Ambani to move from trading into manufacturing: “I was constantly thinking of going into manufacturing. My desire was motivated by the fact that we were not able to produce and supply a quality fabric to the export market.”
Most successful leaders consider it a necessity to have strong and thriving competition for the betterment of industry as a whole and to spur innovation.
“Whether it's Google or Apple or free software, we've got some fantastic competitors and it keeps us on our toes.” – Bill Gates
It is nice to have valid competition; it pushes you to do better.– Gianni Versace, Designer and founder of Versace fashion house.
Look at the attitude of Sam Walton, founder of Wal-Mart, “Of course, Wal-Mart wouldn’t be what it is today without a host of fine competitors, most especially Harry Cunningham of Kmart, who really designed and built the first discount store as we know it today, and who, in my opinion, should be remembered as one of the leading retailers of all time”.
Another characteristic that I have observed in leaders is that they compete to WIN. They don’t enter into plays that they have no hope of winning.
“If you have don’t have competitive advantage, don’t compete” – Jack Welch.
The outcome is far from certain, but they go in with hope and feel they have a right to win. This idea of having a right is another key factor in a leader’s playbook – they build capability, seek advantages they have, make them stronger in order to feel in their minds that it is their game to win or lose. This doesn’t mean they are always successful. They take risk – albeit calculated, moderate risk; a level of risk that makes them stretch and grow in their capabilities. This combination of trust in their right to win and the knowledge that they are taking a calculated risk gives them the attitude of- “Hope of Success” versus “Fear of Failure”. It is a fine form of calibration – how much risk versus the degree of advantage they have to manage risk – each leader arrives at the right balance through much trial and error; through many failures and successes. Learning from such performance feedback is another hallmark of leaders. In fact, such leaders actively seek and solicit such feedback in order to grow their capabilities.
This drive for competition, this tendency to see work and world as an arena full of opportunities for competing and winning manifests itself in the types of goals they set for themselves and their businesses. There are broadly three types of betterment/ competitive goals that leaders set for themselves and their followers.
Competing with existing standards of excellence
Leaders often set goals that seek to better the existing records; be the best of the pack; be the first in a field of endeavor. Such goals provide the motivation they seek to drive their own as well as their followers’ performance.
“We want to give the best customer service of any company in the world.” (Thomas J. Watson Jr. of IBMin 1963).
“Walk into a Chase branch and we can give you so much quicker, better and faster. Like in Wal-Mart”. (Jamie Dimon, CEO J.P.Morgan-Chase)
Almost always, these standards have been established by others and it is often easy to mistake the competition as personal. However, it is important to note that this is their “External Focus” and not personal animosity toward other leaders. Many times though, competition does degenerate into personal animosity and such tales of corporate battles on the basis of interpersonal competition are many in business. However, when focused on competition with standards, this type of goals – those that have external focus most typically find expression in being better than others in various aspects of a business and in the end, take an entire industry to another level through the competition, and he innovation it takes to win.
“If there’s one reason we have done better than of our peers in the Internet space over the last six years, it is because we have focused like a laser on customer experience, and that really does matter, I think, in any business. It certainly matters online, where word of mouth is so very, very powerful.” Jeff Bezos of Amazon.com
Often, most externally focused goals are about customers – acquiring customers, serving customers and earning customer loyalty in a fashion superior to competition. Another leader who set some memorable such goals is AG Lafley, CEO of Procter & Gamble. He directed his company to win two moments of truth with consumers – the first moment of truth occurs in the retail store where the consumer shops. If the consumer chooses a P&G product over competing products, it is a win for P&G. The second moment of truth occurs when the shopper uses the product and is so delighted as to become a loyal consumer. That is the second win. Such type of goals direct the energies of the organization into coming up with better ways to serve customers and as a result win against competitors. And, in general they are more motivating to employees and generate better action than goals such as, “highest share of the market”, “Largest selling brand”. Such goals are aspirational but it is difficult for employees and managers to figure out intuitive action plans to achieve them.
Competing with own record of excellence
“I loved the feeling of freedom in running, the fresh air, the feeling that the only person I'm competing with is me.” - Wilma Rudolph, US Olympic Athlete, winner of 3 Gold Medals
“I am never fully satisfied with any Microsoft product.” – Bill Gates
“Meeting deadlines in not good enough; beating deadlines is my expectation.” – Dhirubhai Ambani
Another manner in which leaders set up goals to compete and motivate themselves is to beat their own records; do better than last quarter; find ways of improving results that are already records in the history of their business – sales, profits, margins, inventories, costs; nearly any aspect of a business that has evolved over the years provides tremendous opportunities for improvement goals.
Such goals have two advantages – firstly, they move the envelope forward one step at a time; they keep up the forward momentum of the business. They have the added advantage in that the past record is easily understandable to managers and it is easier for them to find ways of doing better – they know the work and they produced the previous results.
This type of goal is one of the primary drivers of continuous improvement that so many companies strive for in every aspect of their operations. While it sounds almost intuitive to have numerous such goals in a business, the trick always lies in setting up a realistic, achievable and measurable goal for the company to strive toward. Too high or too low an improvement goal is not motivating for the leader or for the employees.
Most successful leaders that I have observed set up these goals on the basis of a longer term objective or vision of where they want to see their company. Once they develop a long term objective for the company’s position within their industry, they develop a “glide path” of progress toward that objective that is defined in a series of measurable goals that are spelled out by year and by quarter. When Jack Welch declared that GE would be #1 or #2 in every business they competed in, he established a time line for that strategy and set up goals that were stretching, yet achievable for his managers and employees.
Such glidepaths and phased approach to improvement makes performance feedback, celebrations of success and investment in gradual building up of capability possible. Without such an approach, many leaders invested heavily in capabilities (e.g. technological up-grades, particularly in manufacturing; hiring of top talent without challenging projects, etc.) that were not necessary and led to drain of resources. Lack of detail behind the long term goals and the lofty speeches to employees only led to disbelief and distrust within the organization.
Create Unique Accomplishments
“An iPod, a phone, an internet mobile communicator... these are NOT three separate devices! And we are calling it iPhone! Today Apple is going to reinvent the phone. And here it is.” – Steve Jobs
Apple created a unique interface between machines and people that so many companies try to copy. They integrated into one machine the functionality of multiple products. They made products that were not “open architecture” like PC and other platforms were, but met or exceeded user needs in such machines by a great degree compared to other platforms. Jobs’ genius was to marry every aspect of the looks of design of Apple products with what they did – there wasn’t any design for design’s sake which was unique in his industry.
“What we want to be is something completely new. There is no physical analogy for what Amazon.com is becoming.” – Jeff Bezos
Amazon’s story is amazing. The novelty and uniqueness of their market place, their business model, the new approaches to warehousing and delivery, including potential future use of drones must stand as a unique accomplishment in e-Commerce that has so many trend setters. Jeff Bezos’ motivation is clearly spelt out in the above quote – he wants Amazon to be something completely new!
“Actually, as an entrepreneur, I think nobody has money problems, only a lack of ideas. People keep lamenting about a lack of money, but in most cases it is money-making ideas that they need to mobilize funds.” – C K Ranganathan, Chairman, CavinKare
It is easy to think that technology industry has more opportunities for such uniqueness versus others. Here is an example from consumer products industry - in 1983, C K Ranganathan of CavinKare created something unique in the Indian market by starting to manufacture and market shampoos in small sachets that opened up beauty products to a large portion of Indian consumers, many of whom could not afford to pay the cost of full bottles of shampoos marketed by multi-nationals. He was not the first in the field – Godrej was already selling Velvette shampoo in sachets. He was not the inventor – his father built the machine that made their sachets. Ranganathan’s unique accomplishment was to create an activity system of marketing, distribution, etc., that made the product accessible to hundreds of millions of Indian consumers at an affordable price point. Today, nearly every FMCG company operating in India has sachet business. This format was taken to dozens of other countries as a way of making such products accessible and affordable.
This is the third way leaders motivate themselves and their followers – setting goals for creating unique accomplishments in their industry. Often, the accomplishment lies in the way the leader brings together their capabilities, the competitive situation, the consumer and customer to craft a unique approach for betterment of their business.
In a non-business arena, India’s Aadhaar – the biometric ID project is a unique endeavor in the way it brings together available technologies and ideas for a truly unique individual identity that exists on the cloud – no other country has such a system.
In summary, leaders are competitive beings. They love competition for the energy, the lift, the motivation it gives them. Their competition is with standards of excellence (= setting new records) and not with people. Their competition manifests in goals that they set up for the betterment of their business. They do it in three ways – competing with external standards; competing with own record of excellence and striving to create unique accomplishments. They choose their arenas carefully – they compete where they have an advantage; they take only moderate, calculated risk. They go into the battle to win – they play to win; not to avoid losing.
In the next piece we will examine the way successful leaders think about Creating Winning Conditions in their businesses. Often many people call it the Winning Culture.
Paul Mracek is the CEO of Kotan Australia. He is a 7th degree Black belt holder in Martial arts. He has 25 years of experience in Asia, Europe, USA and Australia in leading multimillion dollar companies and building successful businesses. He is also an author of several books on success and business, balance and how to apply ‘success mindset’ to any part of life. Paul is a Master coach and practitioner of NLP, TLT and Hypnosis. He is a Chartered Professional Engineer, Fellow of Australian Institute of Management, Graduate of Australian institute of Directors. Paul works with a few companies in India. Theindianmanufacturing.com caught up with him during one of his trips to India to get his views about ‘Managing Costs in the new normal environment where the growth is not very high’. With experience in business environments on different continents, Paulis the right choice to talk about this subject.
Managing costs in the new normal environment where the growth is not very high.
There had been a big change in India in the last 2 years. Most of the Companies have experienced either ‘no growth’ or ‘low growth’. This is quite different from the previous 7-8 years when the Indian Manufacturing experienced healthy growth. Companies are struggling to readjust to the new normal.
The Indian Manufacturing.com (TIM) :What are your observations about the Indian Manufacturing companies in the last two years when the economy had not been doing very well?
Paul Mracek (Paul) :Indian manufacturing companies are suffering from similar pains as those companies in other countries when the normal growth rates they are used to are no longer happening. They are seeing their profitability and sales go down quicker than they can adjust to the market conditions. Customers are being cautious and not holding as much stock as they have in the past due to the tough financial conditions that all countries are struggling with. The lack of money in the market is affecting both private and Government spending and creating uncertainty in people’s minds, so they are delaying spending money where ever they can.
All the companies are looking to try and take cost out of their businesses, look for new or different markets and products, which of course takes money, time and resources. While at the same time competition has become harder and prices falling that impacts further profitability.
TIM :How do you think they are coping with the cost of operation?
Paul :They have not been used to managing their cost base as efficiently as they could and in proportion to the demand or volumes to match. They have not been used to managing their cost base as efficiently as they could and in proportion to the demand or volumes to match. Labour has always been seen as a small cost and not that well managed, by this I mean they tend to have 20% more people than really needed if the operations where set up to match the demand properly. The challenge with constant growth is that the additional operations, machines and people are just squeezed into the existing space (footprint) as best can be done, rather than necessarily being re-planned from the start again to get the best efficiency and cost base. When the volumes drop this then becomes a bigger cost burden or anchor to the business.
TIM :How to become cost competitive to face the global environment?
Paul:Lean manufacturing to take out waste and Six Sigma for quality to take out variability become even more important in these cases. Quality and Cost are not just differentiators for business anymore they are pre-requisites for staying in business and keeping customers, especially in a more competitive market. Delivery and Service are the deciding factors in my opinion what will make your business standout from others in the market place. Customers don’t want to hold stock, because it costs them money and profit…so they are looking for suppliers to be able be more flexible and make and deliver products quickly as demand changes. Service is your ability to be able to be exceed your customers’ expectations and be one step in front of them in providing product and services that they can trust and give them no extended or ongoing issues. This is looking at the whole of life cost for them to supply the products to the end customer or user.
TIM :Can you give some good examples of Companies who are managing their costs very effectively?
Paul:The companies that manage these factors effectively and are flexible enough to adapt quickly are certainly the ones that are going to survive and grow into the future. They are also looking to continue to invest into the knowledge base within their companies, i.e. to train their people and to find ways to effectively use technology to support. This doesn’t always mean automation, rather ways that they can cost effectively find the right balance with their existing workforce. Rather than talk about specific companies I would indicate that it is more to do with specific market segments, for example Automotive, Petro-Chemical and pharmaceutical are usually operating with this mindset.
TIM :Raw materials are the biggest cost in the P&L of most of the companies. Can you give some insights about managing these costs?
Paul:Yes raw materials are normally a large part of the cost of product and doing business. As many companies in the past have found, constantly pushing prices down with suppliers can back fire and your business ends up suffering. Certainly you need to get the best price, however if you are both not making profit then there is only one thing that will happen, you will both go out of business. The best approach from my experience is to be open and get your suppliers to be active in your cost reduction programs and help them so they can help you in providing new ideas on different designs, materials, supply options, stock levels, terms and of course costs. They generally have more ideas than we think which can have substantial impact on your costs and profitability.
TIM :People costs are perhaps the next biggest in most of the Companies. How do you think Companies can manage these costs?
Paul:From my experience most companies don’t do this well, unless they have some training in method time measurement and workplace and tool design. On average as I mentioned before they have around 20% too many people. In addition the participation or engagement levels by employees is far from ideal with at least 1 in 3 doing enough just to survive; meaning that they are not actively looking to improve their performance or that of the business. Establishing standard processes and training people to use and stick to them is a great first start, this allow companies to easily calculate the number of people they need based on the changing demand levels. The next par to look at engaging their people better so that they are more productive…through training and coaching of the key supervisors and managers.
TIM :The White collar productivity or the productivity of Staff is a subject that is not addressed by many of the Indian Manufacturing Companies. What are your views on this subject?
Paul:Absolutely this is a big area of opportunity I have seen in Indian companies. There are many that are operating with what I call the old school method, of just do what I say…and don’t listen enough to what their people are saying. The risk with this approach is that you disengage one of the biggest resources and cost within the business. Like machines you have to do maintenance with your people and this is the role of the white collar staff in the business. Telling people might get you the quickest result, or at least that this the thinking however it doesn’t mean that you get the best and most cost effective outcome.
TIM :I observe that Staff in Australia or USA or Europe tend to be much more productive than those in India. What do you think are the major differences between the Staff in these countries?
Paul:Yes and no, I have seen both more and less productive staff depending on the country and industry that we talk about. I think that one of the different key drivers for overseas companies that certainly drives a different perspective and constant looking to improve the performance of staff is the cost of people. This is a lot higher in Australia, Europe or Europe, for example on average it is around $18-$20 per hour base rate and then with statutory charges this can go up to $35-$40 per hour for the company. So there is certainly an incentive to get the most out of the staff that they have…and not to have too many.
Therefore the companies see the need to have coaching and training of the people as it pays by impacting the company bottom line.
TIM :Profitability of 10-15% is what an Indian Company looks at / aspires for.. Do you think these are reasonable targets and what is the profitability of Manufacturing companies overseas?
Paul:I think that the 10-15% profitability targets are reasonable targets as a minimum, after all the other option for returns on capital are to invest into the share market or with banks and they need to be competitive with them. The better companies overseas are looking for returns of 20-25% to be able to grow the business by generating the cash flow internally and be able to invest in new products, equipment and markets.
TIM :Can you give examples of a few companies where you trained the staff and the level of improvement that you were able to achieve?
Paul:Even though I am now consulting, coaching and training businesses I have found that as a leader in an organisation that there is a constant need to train your people so as to raise the level of knowledge, skill and performance in the business. You might have the title of manager, president, director or managing director the business performance is dependent on your people. It is something that everybody should be doing constantly and consistently all the time. Over the last 10 years I have taken a number of companies through strategic change and training programs that have resulted in improvements is the following key business measures:
- revenue improvements of 65+%
- export improvements of 50%
- quality improvements of 90%
- cash flow improvements of 250%
- productivity improvements of 25+%
- inventory improvements of 30%
- production output improvement of 50%
TIM :What is the importance of I.T and how can this be used to boost the productivity of the people in the organization? Can you give some examples of companies using I.T effectively?
Paul:I have seen too many times in businesses where I.T has not delivered the stated returns and ended up costing the business rather than saving or generating money. For me I.T is an enabler and needs to complement the existing business activities and processes. It needs to be able to provide benefits to both internal and external customers. I.T systems can provide a competitive advantage for the business in identifying key business parameters, for example product costs – planned and unplanned, headcount and capacity planning, inventory planning and levels to match demand, forecasting, support sales & marketing programs and rollout of new products and services, customer service, and of course financial planning. All these things can be done in real time with a good I.T system, providing timely information to management so as to make informed decisions.
Customers’ expectations are that they are kept informed and responded to within 24 hours to whatever questions or enquiries that they have. Unfortunately I have seen more companies getting it wrong with I.T systems than right, mainly because they haven’t documented or understood their own internal processes and procedures..which is often called “legacy systems”. Getting this right first is what will determine how effective any new I.T system will be for the business.
The size of the company is not really an indicator as to how good their system is. A couple of good systems that I have seen by large corporate companies are Robert Bosch (German company, Regal Beloit (USA company) and TVS (Indian company) which both have subsidiaries operating in India. On the other end of the scale I have also seen a small company approximately $10million sales in the training industry set up their own system using standard software who are be best in class and has delivered increased sales due to the improved customer service and regulatory compliance that they were able to achieve.
TIM :What role should a Leader play in preparing the Company towards a much more austere environment with respect to costs?
Paul:This is a good question and the old saying of “A company is a reflection of its leader” really does apply in this situation. All the resources of the business needs to be focused and used effectively in a cost and cash conscious environment. I have found that there are many opportunities for businesses to improve productivity, develop new products and services and reduce costs that get missed because they are not tapping into the existing knowledge base of their staff.
The leaders role is not all about telling others what to do, it is more about getting engagement of their staff, which drives responsibility and accountability. It allows the leaders to be able to delegate with control and be able to focus on working on the business which is what they should be doing. In India where there has been a long time of economic growth, there will be and is a generation of managers and staff who don’t know what or how to do things in a slowing or negative growth market-environment. They need to be taught what to look for and how to do it, and this is the leaders role to ensure that the appropriate knowledge and skill through coaching and training is provided to staff.
TIM :How to avoid the company getting in to too much of Cost control and forgetting the main goal of growing?
Paul:This is a constant challenge for many businesses around the world over the last few years, and I have to say that it is not as difficult as people seem to think. I have found from my experience it is reasonably simple, however the challenge here is that “Simple, doesn’t mean easy!” It requires focus, action and most of all discipline to stick to what needs to be done even if it is uncomfortable.
The constant theme that I have seen that is missing is to have within the business documented processes and procedures for all the key requirements in the business. This means production, quality, sales, marketing, accounting, purchasing and human resources processes as an example. Too many times I have found that this is not clear for staff and they do the best they can based on their experience level and this is where things start to go off track and cost more money, time and resources than expected. Staff need to keep strictly to the processes which have known outcomes and timeframes. Every time I have seen blowouts in projects it has been more than 90% of the time due to people going away from standard processes and procedures. As I said simple and not necessarily easy.
TIM : How to balance long term benefit and short term cost control ? Can you give an example of some companies who do this best?
Paul: This is an interesting question and makes the assumption that there is a difference between long term and short term in the way the business should operate. I don’t see this as being the case, the two should be in alignment and all activities need to be directed to what is driving growth and profitability for the business. The companies that do well in time of slower economic growth are the ones who stick to what they have been doing and works. Investing in your people through training and coaching is going to pay dividends all the time, and usually even more so when people are worried about their jobs. Unfortunately the first thing that businesses do in a slowdown is to cut this area which gives the organisation the wrong message and productivity, quality and in the end sales-profitability suffer. After all what is making your business different to everybody else out there.
The companies that I mentioned earlier Bosch, Regal Beloit and TVS provide an example of what can be done in a positive way…and of course we can all improve and need to make sure that we don’t get complacent thinking that nothing more can be done.
Learning To Be Better Leaders
By Anand Prasad Kruttiventi
This series of articles are my personal learning and reflections of working with and observing leaders in business, government and society in general over the last 35 years of my working career. In this period, I have worked in 6 different countries in various capacities. What I liked most was directing the Leadership Development efforts of two very large, global companies that are leaders in their industries.
One of my beliefs is that while we can always see what others leaders DO, we can’t emulate those actions. Nor is it the best way to develop our own leadership potential. It is easy enough to see what Bill Gates does as a leader. It is both difficult and unprofitable to mimic his leader behavior. His context and his reality are different from ours.
I believe the best way to learn from leaders like Gates is to understand their thinking frameworks; the internal workings of the machinery of leadership inside those people. I believe this is a better way to develop our own leadership potential in a sustainable manner.
This could also help us avoid the fads that are always present around us – servant leadership, inspirational leadership, mindful leadership, and so on. While all these types of leadership have many insights we can learn from, none of them are panaceas – each of us needs to develop our own philosophy of leadership and our own personal style in order to sustain our growth as leaders over a lifetime.
In this first article, I will lay down the framework of my own thinking, drawing from my observations of leaders. In subsequent articles, I will deal with each of the elements of this framework in depth.
Here is the framework.
1. They Compete and they Win: Firstly, leaders are competitive. They thrive in competition. They aspire to betterment and they like to do the more difficult thing. As one of the leaders of women’s tennis, Victoria Azarenka said in a TV interview, “The easy is boring”. They typically compete in the following ways:
a. Compete with existing records of excellence:Leaders like to set new records of excellence. In their quest for new records, their competition is always with the standard of excellence, not with people who hold the current record. Jack Welch of GE wanted all his businesses to be #1 or #2 in their industries. Tha was a nearly un-heard standard of excellence at that time.
b. Compete with their own record of excellence:Leaders like to beat their own records all the time. One of the most apparent ways they do it when they set financial and commercial goals – next quarter is usually always better or higher than the last quarter. Steve Jobs’ obsession with creating the ultimate interface with technology produced so many excellently designed products that were all better than the last one.
c. Create unique accomplishments:Leaders often want to leave a legacy that is difficult to replicate. Sometimes, it is the businesses they create; sometimes it is the product/ technology that are unique; sometimes it is the way of doing business. While having many forms of expression, this desire to be a stand-out, a path-breaker/ pioneer, a change agent is another quality of the thinking of best leaders.
d. They create conditions for winning:They create winning businesses and organizations. This is reflected in:
- Choice and Commitment: Leaders choose where they play and compete. And, once they choose which is often late and at the last minute, they fully commit themselves to that particular path, nearly to the exclusion of other alternatives. Through this commitment, the invest resources, energy, people, and themselves in pursuit of the goal that they have chosen. Choice focuses the energy and resources of the organization and commitment provides the level of self-belief and concentration on the goal.
- Focus on Execution: Once the choice has been made and resources committed, best leaders make execution easy. They invest up front in communication, in getting people on-board the chosen path, in training them to capable and placing the right people in the right places. Once this up-front effort is completed, execution occurs without distractions, without a lot of cross-talk and dissent, without too much re-training while in action.
- Culture of Performance: Great leaders create and nurture a culture of high performance that is clearly balanced by fairness. Culture of high performance is usually evident in the milestones for progress that are set up; results that are published broadly for everyone involved to be clearly aware of progress and problems; a review process that focuses on learning from the past period to do better in the next period of action. Fairness is evident in this culture in two ways – 1) Performance Feedback that is data-based; and 2) a reward/ pay structure that is geared to the market.
- They are present: Best of leaders are in touch with the reality all the time – about themselves, their business, their customers, their consumers, their operating environment, their best people, and their management. They seek and quest for feedback on all these aspects so that they can learn, change and do better. They don’t set goals and depart for the golf course. They are present in action with their people all the time.
2. They develop others into leaders: Great leaders are not threatened by people with better abilities than themselves. They love to see such people achieve their full potential and do all that they can to help them grow. They take risk – they place the people with most potential, sometimes less tested people into the most critical and challenging roles in the business. They create space where their people can be innovative and are able to take initiatives and risk. They give autonomy gladly and also support and help with equal level of happiness.
3. They work at being better leaders every day:Best of leaders are conscious of their actions; they are mindful and purposeful in most of their behavior, especially public behavior. They learn constantly and from everything and everyone. They are curious. They love to teach because that is one of the best ways to learn – especially about themselves.
This, in short is my framework for being the best leader one can be and continue growing every day. In future articles, I will examine each element of this framework in some depth and offer some real-life observations and commentary on leaders that I knew or I observed.